XBox 360 price cut? Not confirmed but...

[Razer]

from Gamepro.com-

A new report released on Monday in addition to several analysts suggest a cheaper Xbox 360 could be announced as early as this week on the heels of Sony's PS3 price reduction to $499. Xbox 360 dropping to $350 this week?


The San Jose Mercury News is reporting today that a lower-cost Xbox 360, code-named Falcon, is already in the works. The new design features a smaller, 65-nanometer processor as opposed to the current 90-nanometer machine. The rumored chip will likely be easier to manufacture, thereby costing less, and it emits less heat likely causing fewer system failures.

"We have a bunch of different projects that cost reduce and improve quality as you find issues," said Xbox president Peter Moore when asked about the Falcon chip. "Once you get millions [of consoles] in the field, you learn about the box under all kinds of different circumstances, you can adjust and tweak what you do accordingly."

Analyst Micheal Pachter said on Monday that Microsoft will, in fact, reduce the price of the Xbox 360 tomorrow at the start of the company's E3 press briefing. He believes the $299 Core will drop to $249; the $399 Premium to drop to $349; and the newly released $479 Elite to drop to $399 in response to lower-than-expected sales of all three systems.

In a related story, Microsoft's VP of Xbox Japan Darren Huston told reporters today that the company has no plans to cut the Japanese price of the Xbox 360 given its competitive pricing in the territory.

UPDATE: Microsoft has offered the following statement in light of today's rumors: "We have no announcements to make on pricing at this time. While price matters, content is king. And no other system is offering all the games people want to play this holiday at a better price than Xbox 360. With games like Halo 3, Grand Theft Auto IV, Madden NFL 08, Guitar Hero III and Rock Band to name a few, we have the greatest line up in video game history. Also, we are constantly updating internal components on our consoles and therefore will not comment on details of specific components or manufacturing processes."

[Aiman]

From Gamespot.

Gamespot wrote:

E3 07: Analysts expect 360 price drop Sony has made the first price cut in the new generation of console wars, and industry watchers think it might be time for Microsoft to answer. By Brendan Sinclair, GameSpot Posted Jul 9, 2007 1:20 pm PT SANTA MONICA, Calif.--The E3 Media and Business Summit hasn't even started yet, and the big news has already started to break. Late last night, Sony announced it was lopping off $100 from the 60GB PlayStation 3 and releasing a new 80GB model bundled with MotorStorm in August. Today, a handful of industry analysts sent out investor notes with their own predictions for the show, and each addressed the distinct possibility of Microsoft announcing a price cut for the Xbox 360. Lazard Capital Markets' Colin Sebastian, Wedbush Morgan Securities' Michael Pachter, Oppenheimer's Shawn Milne, and Nollenberger Capital Partners' Todd Greenwald all brought up the possibility of an Xbox 360 price cut, but they differed on how much the cut would be and when it would be revealed. Pachter suggested Microsoft would cut the price of the Elite model of Xbox 360 from $479 to $399, with the Pro and Core packages shedding $50 each, to $349 and $249, respectively. "On balance, we think that the lower $499 price point for the PS3 60GB model offers consumers a compelling value compared to the current $479 price point for the Xbox 360 Elite model," Pachter wrote. "While the Elite has a 120GB hard drive and HDMI cables, it does not have WiFi built in nor does it offer Blu-ray playback capability, with both standard features for the PS3. Similarly, we think that the $499 PS3 compares quite favorably with the $399 Pro 360 model, which has only a 20GB hard drive and no HDMI output. Because of this favorable comparison, we believe that Microsoft is all but compelled to cut prices, and we think the price cuts will come no later than at Microsoft's Tuesday night press conference." Sebastian was not as convinced about the breadth or immediacy of the price cut, but he too said it was coming. While Pachter expects the cut to be announced no later than tomorrow, Sebastian thinks it will arrive "before the end of the summer." Furthermore, he told investors that the cut--which he pegged at $50--would be on "at least one" of the Xbox 360 packages, rather than all of them. Milne's view was similar to Sebastian's, with the analyst expecting a $50 price cut on the Xbox 360 sometime before the launch of Halo 3. However, unlike his counterparts, Greenwald did not say straight up that he expects a price cut. He instead pointed to E3 2002 as a scenario that might repeat itself. "During the last cycle, the first PlayStation 2 cut occurred after 19 months. Coincidentally, the Xbox 360 has now been on the market for about 20 months, with no price cut as of yet. Also, last cycle the Xbox got a $100 price cut after just six months (the PS3 has been out for eight months and we believe is in desperate need to catch up to the 360 and Wii installed bases). Therefore, if this cycle were to follow the last, we could see a $100 price cut on both the 360 and PS3."

But they also said this...

Gamespot wrote:

Microsoft's press briefing comes at a difficult time for the company. Its Xbox 360 has been taken over in sales by the Nintendo Wii, and, following increasingly widespread reports of hardware failure, the company recently announced an unprecedented extension of the warranty for the Xbox 360.

[Razer]

The 60GB PS3 at $500 kills the XB 360 Elite at $480 so I believe M$ has to cut the price. The funny thing is that neither company can afford to do this given the loss they already absorb on hardware. I'm not trying to hear that "we've found cost cutting redesigns" or other crap. Also remember that Nintendo is making profit on the Wii right out of the box so if they redesign it and cut production cost they can match a $50 drop, bring out a $199 (or even $179) Wii, and STILL make money. I'm going to predict a package redesign when WiiSports 2 comes out (XMas 2007?) where it replaces the initial version.
Sony is drop dead desperate (having 3 different SKUs on the market (the "beginner" PS3 is still in stores, if not in production)) and M$ is responding because of their own dumbass decision to bring out the XB Elite. They could have simply redesigned the existing model(s) to include wi-fi (since they're not going to buck on the HD-DVD/BluRay issue) and offered a simple USB plug in on the XB Marketplace. Sony did the price change also because they HAVE to change up the current packages now that the controllers are going to be redone with feedback/rumble so it wasn't as much an option as it is to M$.
At this point I think either of them trying to catch the Wii is simple stupidity. The PS3 will be around for awhile because Sony will not let the brand sink that easily even if they have to eat a lot of red ink so it has a good chance of eventually surpassing the Wii's base. I predict 2009 for that. M$ has also solidified a solid base now that XBLive has shown it's near impossible to surpass in terms of complete features (Nintendo has no intentions of trying to equal it and Sony won't have a decent chance until their next generation of the service) so focusing on the Wii in any instance doesn't make sense to me. Nin established themselves with the "brainwash" marketing. "The Wii will be a companion console to the PS3 and XB and not a direct competitor". This way consumers will say "I'll get my Wii now and my PS3/XB when the price drops". But as they play the Wii they find that the gaming value is simply way greater than they thought. The PS3 does not have the pure gaming value of either the Wii or XB and the XB doesn't have the franchise power of Nintendo...hence the PS3 and XB will actually become the "2nd console" in the gaming household when reality rears it's ugly head.

Just my 2 cents.